Since founding QuestDB, we've raised over $15 million in venture capital to fund the development of the fastest open source time series database. This blog post describes the two-year journey to raise our Series A, what we learned along the way and the pitch deck we used for the raise.
Founding an open-source company
I met my co-founder Vlad at a fintech startup and he told me about a project of his that was 5 years in the making. "I have built a database from scratch and I want to make it open source to empower developers to store large amounts of data efficiently. It's a fast database that doesn't use code dependencies and you can access the data with SQL". We discussed the ins and outs of why people need a system like this and I was all-in on the idea of starting a company around it.
We started our journey in London, which hadn't typically been the birthplace of successful open source databases. Pitching a database made from scratch with an optimized codebase in zero-GC Java/C++ to squeeze every bit of performance from modern hardware wasn't an easy affair. Most of the venture capital funds we initially met were struggling to understand the value proposition, especially for an open-source product that wasn't generating revenue at the time.
Preparing for a seed round
In the spring of 2020 we were asking for $2m to hire a few talented engineers and work on the product. We eventually met a few VCs who saw the potential from a technological standpoint but wanted to see revenue even though we incorporated the company a few weeks before. We then met a believer, Paul at the VC firm Episode 1, who had lived in the bay area for decades. He understood the potential of open source and community building to fuel developer adoption. We eventually convinced several other European funds with a growing interest in open source startups such as Seedcamp to invest as well. In March 2020, we raised $2m overall, which kicked things off.
We launched an open source version of QuestDB and we wanted to let developers know about it to gather feedback. We had just implemented SIMD instructions to run fast SQL queries and released a live demo including a dataset of 1.6 billion rows with SQL queries that could be executed in milliseconds1.
Joining Y Combinator
The reaction of developer communities such as Reddit or HackerNews were positive2, which gave us confidence that we were building something meaningful. We then applied to Y Combinator and convinced our three partners Jared Friedman, Michael Seibel and Harj Taggar to accept us into the Summer 2020 batch, the first remote batch in YC's history.
At Y Combinator we focused on product, our community and early users. As we launched on HackerNews3, our popularity on GitHub grew further and we had more than 300 investors reaching out directly after YC Demo Day. We had already raised our seed round before joining YC, so we decided to dismiss the hype to avoid diluting our stake in the company further.
Key startup advice from Y Combinator
YC urged us to find product market fit (in our case, community market fit) and start hiring afterwards. Many companies are incentivized by venture capitalists to deploy large amounts of capital and hire large teams before even finding their product market fit. Hiring lots of people gives you a sense of false security, giving the illusion that you are growing and making meaningful progress. However, without product market fit, the company's prospects are no better, and the higher cost base makes it all the more difficult.
We decided to build QuestDB with a handful of engineers and spoke to more than 50 early users to collect meaningful feedback and make sure we were going in the right direction. We did our best to delight our early users, building the product for them, and tried to be as responsive as possible in the process.
"Do things that don't scale" is one of the top pieces of advice from Y Combinator. Building bespoke features for our first users was not something we could scale over time. But it was the most important phase for us to make progress, initially.
Successfully raising a Series A round
Our community continued to grow and the project crossed 5k GitHub stars as we shipped our biggest release to date4. We had more than 50 code contributors on GitHub and more than 800 developers joined our Slack community, while our unique instances deployed grew by 500% year to date.
We decided to embark on another fundraise to double down on improving the database in Summer 2021. This would help us build a fully-hosted managed service on the cloud, which would be our primary path to revenue that can scale over time.
YC's advice was to speak to founders who had built open source enterprise companies before and try to get them on board to benefit from their experience and hindsight. Venture Capital funds can be helpful beyond money, but we found that angels can truly be transformative because they have been through a similar journey.
We followed this advice and brought 15 open source founders and executives from GitHub, Docker, Reddit, NGINX, Instana, D2iQ, Coinbase, Cisco, Microsoft, Airbnb, PostHog, Supabase, and FingerprintJS. The same applies to the lead investor as our board member Florian Leibert is the co-founder of Mesosphere which is built around the open source project Mesos. We also welcomed Salil Deshpande at Uncorrelated Ventures who has a track record in open source companies investments such as Redis, Datastax, Netdata, Hazelcast, Armory, dYdX, SpringSource, Gradle etc.
Another piece of advice was to be thoughtful about the amount raised and overall round dilution; hence we decided to raise $12.5m at a valuation which grew by 10x versus the seed round a year prior to that.
Our pitch deck for Series A
We spoke to a lot of investors around the world and this is the deck that we used. The slides tell a story and cover important facets of our business: our team, product, market, traction, customers, competitors, and product roadmap. Perhaps unlike most closed-source companies at this stage, the emphasis was less on revenue growth but more on open source traction, developer adoption and customer love. The open source aspect of QuestDB allowed us to hone in longer on the product while delaying the focus on sales; this is why the choice of investors aligned with our bottom-up, developer-first go-to-market was so crucial for us.
This new injection of capital allows us to hire the best talent worldwide and continue our journey as a true remote-first company, with our employees working from more than 15 different locations spanning North America, Europe and Asia. Find more about us5 and our open roles6.